Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Digimarc CORP | d677807d8k.htm |
| EX-99.2 - EX-99.2 - Digimarc CORP | d677807dex992.htm |
Exhibit 99.1
Company Contacts:
Charles Beck
Chief Financial Officer
503-469-4721
Charles.Beck@digimarc.com
Scott Liolios or Matt Glover
Liolios Group, Inc.
Investor Relations for Digimarc
949-574-3860
dmrc@liolios.com
FOR IMMEDIATE RELEASE
Digimarc Reports Fourth Quarter and Full Year 2013
Financial Results
Beaverton, Ore. — February 20, 2014 — Digimarc Corporation (NASDAQ: DMRC) reported financial results for the fourth quarter and fiscal year ended December 31, 2013.
Fourth Quarter 2013 Results
Revenue for the fourth quarter of 2013 totaled $6.8 million compared to $9.3 million in the fourth quarter of 2012. The decrease was primarily due to the end of the scheduled minimum quarterly license fee payments from Intellectual Ventures (IV) in the second quarter of 2013. The comparative decline was partially offset by increased subscription revenue from a full quarter of Attributor’s sales in the fourth quarter of 2013 and higher service revenue from the Central Banks.
Operating loss for the fourth quarter of 2013 totaled $3.4 million compared to operating income of $1.9 million in the same quarter a year-ago. The operating results for the fourth quarter of 2013 reflect lower revenue and higher operating costs due to increased investments in the company’s product development and sales growth initiatives, as well as the impact of a full quarter of Attributor’s operating costs in the fourth quarter of 2013.
Net loss for the fourth quarter of 2013 totaled $1.3 million or $0.19 per diluted share compared to net income of $1.1 million or $0.14 per diluted share in the fourth quarter of 2012. The decrease was due to lower operating income partially offset by a benefit for income taxes in the fourth quarter of 2013.
Full Year 2013 Results
Revenue in 2013 totaled $35.0 million compared to $44.4 million in 2012. The decrease was primarily due to the $8.0 million past due royalties payment received from Verance Corporation in the first quarter of 2012 and the end of the scheduled minimum quarterly license fee payments from IV in the second quarter of 2013. Revenue from IV for these license fees was $12.6 million in 2012 versus $6.8 million in 2013. The comparative decline was partially offset by increased subscription revenue from a full year of Attributor’s sales in 2013 and higher service revenue from the Central Banks.
Operating loss in 2013 totaled $2.4 million compared to operating income of $14.6 million in 2012. The decrease reflects lower revenue and higher operating costs due to increased investments in the company’s product development and sales growth initiatives, as well as the impact of a full year of Attributor’s operating costs in 2013.
Net loss in 2013 totaled $0.5 million or $0.10 per diluted share compared to net income of $8.3 million or $1.12 per diluted share in 2012. The decrease was due to lower operating income partially offset by a benefit for income taxes in 2013.
At December 31, 2013, cash, cash equivalents and marketable securities totaled $35.0 million compared to $39.1 million at December 31, 2012.
Conference Call
Digimarc will hold a conference call later today (Thursday, February 20, 2014) to discuss these results. Management will also provide an update on market conditions, plans for 2014, and execution of strategy. Chairman and CEO Bruce Davis and CFO Charles Beck will host the call starting at 5:00 p.m. Eastern time (2:00 p.m. Pacific time). A question and answer session will follow management’s presentation.
The call will be broadcast live via webcast at www.digimarc.com/investors and available for replay through February 27, 2014. The webcast will be archived and available on Digimarc’s website at www.digimarc.com/investors/investor-events-and-webcasts.
For those who wish to listen to the call via telephone, please dial the telephone number below at least five minutes prior to the scheduled start time:
Number: 866-562-9934
Conference ID: 14645381
If you have any difficulty connecting with the conference call, please contact Liolios Group at 949-574-3860.
About Digimarc
Digimarc Corporation (NASDAQ: DMRC), based in Beaverton, Oregon, is a leading innovator and provider of enabling technologies that create digital identities for all forms of media and many everyday objects. The embedded Digimarc IDs are imperceptible to humans, but not to computers, networks and devices like mobile phones, which can now use cameras and microphones as sensory inputs to “see, hear and understand” the world around them within the context of their environment.
Digimarc has built an extensive intellectual property portfolio with patents in digital watermarking, content identification and management, media and object discovery to enable ubiquitous computing, and related technologies. Digimarc develops solutions, licenses its intellectual property, and provides development services to business partners across a range of industries. For more information, visit www.digimarc.com.
Forward-looking Statements
With the exception of historical information contained in this release, the matters described in this release contain various “forward-looking statements.” These forward-looking statements include statements and any related inferences regarding increases in subscription revenue, increased investments in product development and sales growth initiatives, and other statements identified by terminology such as “will,” “should,” “expects,” “estimates,” “predicts” and “continue” or other derivations of these or other comparable terms. These forward-looking statements are statements of management’s opinion and are subject to various assumptions, risks, uncertainties and changes in circumstances. Actual results may vary materially from those expressed or implied from the statements in this release as a result of changes in economic, business and/or regulatory factors. More detailed information about risk factors that may affect actual results will be set forth in the company’s Form 10-K for the year ended December 31, 2013 and in subsequent periodic reports filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date of this release. Except as required by law, Digimarc undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this release.
Digimarc Corporation
Consolidated Income Statement Information
(in thousands, except per share amounts)
(Unaudited)
| Three-Month Information | Twelve-Month Information | |||||||||||||||
| December 31, 2013 |
December 31, 2012 |
December 31, 2013 |
December 31, 2012 |
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| Revenue: |
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| Service |
$ | 2,650 | $ | 2,519 | $ | 11,631 | $ | 10,792 | ||||||||
| Subscription |
1,350 | 559 | 5,591 | 1,481 | ||||||||||||
| License |
2,826 | 6,236 | 17,742 | 32,102 | ||||||||||||
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| Total revenue |
6,826 | 9,314 | 34,964 | 44,375 | ||||||||||||
| Cost of revenue: |
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| Service |
1,260 | 1,373 | 5,327 | 5,917 | ||||||||||||
| Subscription |
643 | 217 | 2,491 | 355 | ||||||||||||
| License |
93 | 58 | 387 | 236 | ||||||||||||
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| Total cost of revenue |
1,996 | 1,648 | 8,205 | 6,508 | ||||||||||||
| Gross profit: |
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| Service |
1,390 | 1,146 | 6,304 | 4,875 | ||||||||||||
| Subscription |
707 | 342 | 3,100 | 1,126 | ||||||||||||
| License |
2,733 | 6,178 | 17,355 | 31,866 | ||||||||||||
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| Total gross profit |
4,830 | 7,666 | 26,759 | 37,867 | ||||||||||||
| Gross margin: |
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| Service |
52 | % | 45 | % | 54 | % | 45 | % | ||||||||
| Subscription |
52 | % | 61 | % | 55 | % | 76 | % | ||||||||
| License |
97 | % | 99 | % | 98 | % | 99 | % | ||||||||
| Percentage of gross profit to total revenue |
71 | % | 82 | % | 77 | % | 85 | % | ||||||||
| Operating expenses: |
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| Sales and marketing |
1,822 | 913 | 6,144 | 3,827 | ||||||||||||
| Research, development and engineering |
3,450 | 2,277 | 12,274 | 8,741 | ||||||||||||
| General and administrative |
2,635 | 2,226 | 9,624 | 9,457 | ||||||||||||
| Intellectual property |
313 | 329 | 1,129 | 1,248 | ||||||||||||
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| Total operating expenses |
8,220 | 5,745 | 29,171 | 23,273 | ||||||||||||
| Operating income (loss) |
(3,390 | ) | 1,921 | (2,412 | ) | 14,594 | ||||||||||
| Net loss from joint ventures |
— | — | — | (1,107 | ) | |||||||||||
| Other income, net |
28 | 40 | 109 | 179 | ||||||||||||
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| Income (loss) before income taxes |
(3,362 | ) | 1,961 | (2,303 | ) | 13,666 | ||||||||||
| (Provision) benefit for income taxes |
2,077 | (907 | ) | 1,796 | (5,394 | ) | ||||||||||
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| Net income (loss) |
$ | (1,285 | ) | $ | 1,054 | $ | (507 | ) | $ | 8,272 | ||||||
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| Earnings (loss) per common share: |
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| Earnings (loss) per common share - basic |
$ | (0.19 | ) | $ | 0.15 | $ | (0.10 | ) | $ | 1.16 | ||||||
| Earnings (loss) per common share - diluted |
$ | (0.19 | ) | $ | 0.14 | $ | (0.10 | ) | $ | 1.12 | ||||||
| Weighted average common shares outstanding - basic |
6,913 | 6,791 | 6,866 | 6,757 | ||||||||||||
| Weighted average common shares outstanding - diluted |
6,913 | 6,966 | 6,866 | 6,989 | ||||||||||||
| Cash dividends declared per common share: |
$ | 0.11 | $ | 0.11 | $ | 0.44 | $ | 0.33 | ||||||||
Digimarc Corporation
Consolidated Cash Flow Information
(in thousands)
(Unaudited)
| Three-Month Information | Twelve-Month Information | |||||||||||||||
| December 31, 2013 |
December 31, 2012 |
December 31, 2013 |
December 31, 2012 |
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| Cash flows from operating activities: |
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| Net income (loss) |
$ | (1,285 | ) | $ | 1,054 | $ | (507 | ) | $ | 8,272 | ||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
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| Depreciation and amortization of property and equipment |
229 | 156 | 742 | 600 | ||||||||||||
| Amortization and write-off of intangibles |
316 | 172 | 1,247 | 385 | ||||||||||||
| Gain on reversal of contingent merger consideration |
— | — | (190 | ) | — | |||||||||||
| Stock-based compensation |
1,283 | 1,104 | 4,502 | 5,256 | ||||||||||||
| Net loss from joint ventures |
— | — | — | 1,107 | ||||||||||||
| Deferred income taxes |
(1,069 | ) | (207 | ) | (715 | ) | (284 | ) | ||||||||
| Tax benefit from stock-based awards |
(855 | ) | 1,303 | (855 | ) | 3,688 | ||||||||||
| Excess tax benefit from stock-based awards |
(201 | ) | (1,243 | ) | (201 | ) | (3,044 | ) | ||||||||
| Increase in allowance for dobutful accounts |
23 | — | 45 | — | ||||||||||||
| Changes in operating assets and liabilities: |
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| Trade accounts receivable, net |
(744 | ) | (59 | ) | (1,667 | ) | (187 | ) | ||||||||
| Other current assets |
235 | 264 | (342 | ) | 219 | |||||||||||
| Other assets |
(305 | ) | 34 | (404 | ) | 201 | ||||||||||
| Accounts payable and other accrued liabilities |
(250 | ) | (984 | ) | 124 | (228 | ) | |||||||||
| Deferred revenue |
1,431 | 128 | 1,694 | (384 | ) | |||||||||||
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| Net cash provided by (used in) operating activities |
(1,192 | ) | 1,722 | 3,473 | 15,601 | |||||||||||
| Cash flows from investing activities: |
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| Purchase of property and equipment |
(112 | ) | (194 | ) | (1,644 | ) | (570 | ) | ||||||||
| Capitalized patent costs and purchased intellectual property |
(274 | ) | (272 | ) | (1,098 | ) | (1,170 | ) | ||||||||
| Investment in joint ventures, net |
— | — | — | (692 | ) | |||||||||||
| Business acquisitions, net of cash acquired |
— | (5,092 | ) | — | (5,092 | ) | ||||||||||
| Sale or maturity of marketable securities |
8,283 | 26,534 | 55,627 | 144,214 | ||||||||||||
| Purchase of marketable securities |
(6,404 | ) | (24,312 | ) | (54,590 | ) | (146,444 | ) | ||||||||
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| Net cash provided by (used in) investing activities |
1,493 | (3,336 | ) | (1,705 | ) | (9,754 | ) | |||||||||
| Cash flows from financing activities: |
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| Purchase of common stock |
(968 | ) | (649 | ) | (1,822 | ) | (3,100 | ) | ||||||||
| Cash dividends paid |
(802 | ) | (783 | ) | (3,202 | ) | (2,344 | ) | ||||||||
| Excess tax benefit from stock-based awards |
201 | 1,243 | 201 | 3,044 | ||||||||||||
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| Net cash used in financing activities |
(1,569 | ) | (189 | ) | (4,823 | ) | (2,400 | ) | ||||||||
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| Net increase (decrease) in cash and cash equivalents (1) |
$ | (1,268 | ) | $ | (1,803 | ) | $ | (3,055 | ) | $ | 3,447 | |||||
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| Cash equivalents and marketable securities at beginning of period |
38,111 | 43,080 | 39,056 | 33,378 | ||||||||||||
| Cash equivalents and marketable securities at end of period |
34,964 | 39,056 | 34,964 | 39,056 | ||||||||||||
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| (1) Net increase (decrease) in cash, cash equivalents and marketable securities |
$ | (3,147 | ) | $ | (4,024 | ) | $ | (4,092 | ) | $ | 5,678 | |||||
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Digimarc Corporation
Consolidated Balance Sheet Information
(in thousands)
(Unaudited)
| December 31, 2013 |
December 31, 2012 |
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| Assets |
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| Current assets: |
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| Cash and cash equivalents (2) |
$ | 3,811 | $ | 6,866 | ||||
| Marketable securities (2) |
25,851 | 25,403 | ||||||
| Trade accounts receivable, net |
5,838 | 4,216 | ||||||
| Other current assets |
1,658 | 1,016 | ||||||
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| Total current assets |
37,158 | 37,501 | ||||||
| Marketable securities (2) |
5,302 | 6,787 | ||||||
| Property and equipment, net |
2,395 | 1,453 | ||||||
| Intangibles, net |
6,709 | 6,721 | ||||||
| Goodwill |
1,114 | 1,114 | ||||||
| Deferred tax assets, net |
3,949 | 3,589 | ||||||
| Other assets |
570 | 166 | ||||||
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| Total assets |
$ | 57,197 | $ | 57,331 | ||||
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| Liabilities and Shareholders’ Equity |
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| Current liabilities: |
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| Accounts payable and other accrued liabilities |
$ | 1,560 | $ | 1,143 | ||||
| Deferred revenue |
4,218 | 2,512 | ||||||
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| Total current liabilities |
5,778 | 3,655 | ||||||
| Deferred rent and other long-term liabilities |
496 | 673 | ||||||
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| Total liabilities |
6,274 | 4,328 | ||||||
| Commitments and contingencies |
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| Shareholders’ equity: |
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| Preferred stock |
50 | 50 | ||||||
| Common stock |
7 | 7 | ||||||
| Additional paid-in capital |
41,498 | 39,869 | ||||||
| Retained earnings |
9,368 | 13,077 | ||||||
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| Total shareholders’ equity |
50,923 | 53,003 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 57,197 | $ | 57,331 | ||||
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| (2) | Aggregate cash, cash equivalents, short- and long-term marketable securities was $34,964 and $39,056 at December 31, 2013 and 2012, respectively. |
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